High-Tech Pioneer

Bordewyk, David C., Independent Banker

Welcome to The State Bank, Fenton, Michigan. Just your typical 96-year-old, $205 million-asset, independent bank. Or is it? Step inside this bank and you enter a world of high-tech, electronic banking not found in most community banks today.

Inside The State Bank, the talk these days goes well beyond the traditional boundaries of community bank marketing and retail delivery services. Inside this bank, talk of debit cards, stored-value cards, telephone banking, interactive television and local electronic commerce networks is the norm, not the exception.

And they're beyond just talking high-tech at The State Bank; they're actually doing it.

Consider these high-tech happenings at The State Bank:

* Some 20 percent of its customers already subscribe to a service allowing bill payment by telephone. Within the coming weeks, the bank will introduce a phone banking service that incorporates an electronic display screen on the phone. The display screen is similar to that of an ATM, allowing customers to see their transactions occurring.

* Soon the bank will test a prepaid, or stored-value, card for local school children, who will use the card to buy their school lunches.

* The bank is unveiling an electronic community bulletin board that will eventually carry local commerce and trade online. And the bank will play a big part in facilitating the payments for goods and services on the local network.

* There's a project in the works to provide banking and business services to entrepreneurs who work out of their homes. Small-business people will be able to do more than just bank with The State Bank through their personal computer or phone; they will be relying on the bank for time-saving services such as voice mail and electronic mail.

Welcome to The State Bank-community banking's high-tech pioneer.

The sky's the limit in terms of what is possible at The State Bank. The bankers in Fenton think big and then act locally. At this bank, they're not waiting for the so-called information superhighway to be built; they're building their own.

It's easy to understand why many community bankers may be more than a little skeptical about the high-tech moves The State Bank is making. To those on the outside, The State Bank may appear to be just an expensive laboratory for high-tech fun and games.

But the people at The State Bank in Fenton are taking this electronic banking stuff seriously. To them, it's much more than just an experiment in trendy banking. It's a matter of survival.

"The industry is creating tremendous pressures to change," says State Bank President Robert L. Cole. "If we don't, we will just end up being banks with big, empty vaults and no customers."

Rethinking the Business

Fenton, home base for State Bank, is about 15 minutes south of Flint, an area hard hit economically by the auto industry slump of the 1980s. Today, the area is making a strong comeback. The bank, which posted a 1.32 percent return on assets in 1993, is capitalizing on the resurgent economy. The bank operates seven offices, including one supermarket branch, in five eastern Michigan communities.

Five years ago, State Bank began taking a good hard look at itself. The bank questioned how it could retain a market that included increasing numbers of "snowbirds"--elderly customers who went south for the winter--and growing numbers of young entrepreneurs, many of whom often work out of their homes.

The bank began by switching its core data processing software to a system from Information Technologies inc. The new software allowed the bank to reassemble its customer database by household rather than account number--an important element in modernizing the bank's marketing efforts. From there, the bank examined what new banking tools its changing customer base would want. That led to a debit card and bill payment by phone service. And now, the introduction of a display phone banking service, an electronic community bulletin board and other electronic banking services. …

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